Interdum stultus opportuna loquitur...

Friday, November 19, 2004

Greenspan's "Market Analysis"... What a Chump

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Economic Statistics

There was no economic data released last night. For details on Monday's releases, click on the links below.

Forthcoming US Economic Data

Monday's US Economic Data Calendar

Federal Reserve Open Market Operations

The Fed sat on its hands yesterday, as Alan Greenspan gave the contrarians every reason to believe that the US dollar is at or near a bottom, and that bond markets will rally for the foreseeable future.

Why? Because the worst central banker since John Law has finally come to the conclusion that the massive external and fiscal deficits of the world's greatest moocher (the United States) will have deleterious effects on both interest rates and the US currency.

To quote a famous 6-year-old philosopher... "Well, DER. (No returns infinity)"... and Greenspan is not smart enough to use the super-escape offered by "I'm rubber, you're glue - bounces off me and sticks to you".

Honestly, this dolt is three decades late in this "dire warning". But the average Yank market participant - like any good apparatchik in a centrally-planned economy - cannot take action until someone from the Politburo tells them what they're allowed to think, so the markets obviously felt as if Greenspan's senile blatherings were news.

Here's some more old news - you're a JOKE, Greenspan, and you should just shut your pie-hole and slink off somewhere and hope nobody remembers you when the whole edifice (artifice?) comes crashing down.

Major US Indices

It was one-way traffic for much of the session; Greenstain's remarks were one of the catalysts, but a decent spike in the oil price was another.

The DJIA slid 115.64 points (1.09%), closing out the day at 10456.91 points; the broader S&P500 dipped 13.21 points (1.12%), to end the session at 1170.34. Over at Times Square, the Nasdaq Composite slid 33.65 points (1.6%), to close at 2070.63, while larger-cap technology issues fared worse with the Nasdaq100 losing 28.7 points (1.82%), to end at 1552.11 points.

NYSE Volume was solid, with 1.53 billion shares traded, whileNasdaq Volume was super-chunky (over 2 bill), with 2.03 billion shares crossing the tape.

Nasdaq Composite2070.63-33.65-1.6%
NYSE Volume1.53bn--
Nasdaq Volume2.03bn--
US 30-yr yld4.88%0.06%1.29%

Market Breadth & Internals

On the NYSE declining Issues beat out advancers by 2398 to 943, for a single-day A/D reading of -1455 (talk about gyrations in the old A/D... some days are diamonds, some days are stones); and Nasdaq losers exceeded gainers by 2103 to 1002 issues.

On the NYSE declining volume was greater than volume in advancing issues by 1152.85 to 365.02 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 734.87 to 402.82 million shares.

100 NYSE-listed stocks rose to new 52-week highs, and 6 posted fresh 52-week lows, while on the Nasdaq there were 89 stocks that hit new 52-week highs, and 17 which fell to fresh 52-week lows

Advancing Volume (m)365.02402.82
Declining Volume (m)1152.85734.87
New Highs10089
New Lows617

Market Sentiment

There are still twice as many calls as puts being bought - so the decline I've been expecting (if last night was the start) is not even half over.

Every other sentiment indicator - from the AAII advisory suvey (too bullish) to the VIX (too complacent) to the "chatter" of the US mainstream financial media - screams "pass me my brown corduroys".

Until now there's been no sign of weakness in the advance since Osama's Election Announcement (which should have been counted in the "soft money" contributions to George Bush's re-election effort)...

CBOE Equity Call Volume (000)900.68-145.59-13.92%
CBOE Equity Put Volume (000)437.11-104.63-19.31%
CBOE Volatility Index13.50.524.01%
CBOE Nasdaq Volatility Index19.720.934.95%
Equity Put-Call Ratio0.49-0.03-6.27%
10-day PCR0.52-0.0155-2.87%
SPX-VIX Ratio86.69-4.49-4.92%

Bond Market Analysis

Bonds fell pretty hard, right along the curve. The yield on the benchmark 30-year Treasury bond rose 6.2 basis points to 4.875%.

It didn't get anywhere near 5% this week - but it will next week. I wonder if Greenspan's "restatement of the obvious" was only a partial explanator of the bond market's reversal - the other, more important thing that happened was the US Congress voting to increase the debt limit to over $8 TRILLION.

Like all politicians, they were too gutless to show the public their profligacy before the election - so they waited until after the electronic voting machines had installed their company's favourite, then voted themselves some more debt.

The other important quesiton arising from this is - why pretend that there is a debt "limit"? After all, when these parasites hit their suposed limit, all they do is vote to increase the limit. It's like having a credit card on which the only constraint is your preparedness to vote yourself a limit increase... in the full knowledge that the repayments will be made by somebody else's great-grandchildren.

UST 2Y (yld)2.9080.082.72%
UST 5Y (yld)3.5620.0932.68%
UST 10Y (yld)4.2010.092.14%
UST 30Y (yld)4.8830.0731.52%

The Banks Index dipped 1.43 points (1.4%), at 100.76; within the index,

  • the Derivative King - JPMorganChase slid $0.40 (1.06%) to $37.42; and
  • Citigroup slid $0.76 (1.66%) closing at $45.15

The Broker-dealer Index lost 3.7 points (2.53%), to end the session at 142.51; the ticket clippers lined up as follows -

  • Merrill Lynch dipped $0.96 (1.68%) to end the session at $56.34
  • Morgan Stanley Dean Witter declined $1.32 (2.46%) at $52.26
  • Goldman Sachs shed $1.79 (1.71%) ending the day at $103.04
  • Lehman Brothers dipped $1.70 (2.04%) ending the day at $81.64

The Philadelphia SOX (Semiconductor) index slid 13.76 points (3.09%), ending the day at 431.88

  • Triquint declined $0.23 (5.15%) at $4.24
  • Micron Technology dipped $0.47 (3.86%) to $11.70
  • Intel slid $0.64 (2.58%) ending the day at $24.16
  • Altera shed $0.64 (2.66%) to $23.40
  • JDS Uniphase lost $0.09 (2.79%) ending the day at $3.14

Gold & Silver Markets

Be very careful if you're long gold; it is clearly overheated. I'm happy to be sidelined at the moment - I'm not a gold bug, plus I was long from under $280 for almost a year and a half.

It's the same reason as I'm not particularly in any hurry to be long the Euro: I was long from well under 0.90...

With both of these instruments making multi-year highs, my primary expectation is for the market to crush some newcomers before moving to new highs (even given what I know about the US economy). If I was being more aggressive - or doing this for a full-time living - I would certainly be looking for short entry points for Gold at present, and in the Euro as well.

Regardless, Gold continued what looks like a breakout, gaining $4.40 (0.99%) to $447.50 per ounce. The Gold Bugs Index gained 1.95 points (0.81%), at 241.32 points.

Silver rose $0.06 (0.73%) to close at $7.61 per ounce. The Gold and Silver Index (XAU) gained 1.37 points (1.26%), ending the day at 109.68 points.

PHLX Gold and Silver Index109.681.371.26%
AMEX Gold BUGS Index241.321.950.81%

Oil Market

Damn - didn't get a trade off in either CL futures or calls over the oil ETFs; oil spiked like blazes. isn't it always the way?

You think "It's unlikely to happen today, so I can put off the research and go visit my gigantic nephews (12 and 16, both over 6 feet tall and 120kg apiece)". And what happens? BANG...

The old Texas Tea rompd upwards $2.57 per barrel, closing at $48.65 per barrel. The Oil and Gas Index (XOI) advanced 6.15 points (0.86%), at 719.14 while the Oil service stocks (OSX) Index added 2.22 points (1.84%), to 122.98 points.

Reuters CRB287.51.50.52%
Crude Oil Light Sweet48.652.575.58%
AMEX Oil Index719.146.150.86%
Oil Service Index122.982.221.84%

Currency Markets

Yet another day in the decline of the Empire - and like the solidus and the denarius, the US dollar gets "clipped" a little more each day.

Unfortunately, the clippings can't be traded for their commodity value (as clippings were in ancient times) because the dollar is inherently worthless (and each day it is becoming worth less... get it?).

Still, a bounce is getting more and more likely - although bear market bounces are hard to time, hard to get into, and even harder to get out of: far smarter to wait for the bounce to run its course and then re-initiate short positions.

US Dollar Index83.37-0.33-0.39%
Australian Dollar0.78290.00470.6%
Swiss Franc1.1621-0.0087-0.74%
Canadian Dollar0.83770.00861.04%

European Markets

France's benchmark CAC-40 Index slid 31.61 points (0.83%), at 3798.78; the German DAX-30 Index slid 43.79 points (1.05%), ending the week at 4134.89points, and in the UK, the FTSE-100 Index declined 44.5 points (0.93%), closing at 4760.8 points.


Tonight's Pivots (US Futures Market)

R2106481191.431593.67114 16/32
R1105631181.771576.33113 20/32
Pivot105041175.531564.67113 2/32
S1104191165.871547.33112 6/32
S2103601159.631535.67111 20/32